Republican Donald Trump has been elected as America’s 47th president in a hard-fought race for the White House, amassing 277 electoral votes. With Republicans now holding a majority in the Senate, the GOP could complete a “red sweep” if the House also comes under Republican control.
The news of Trump’s victory has already stirred up significant market activity. In Asia, assets linked to a Trump presidency surged as he gained an early lead. U.S. futures have risen, Treasury yields jumped, and Bitcoin hit an all-time high as financial markets began reacting to expectations of Trump’s policies.
Here’s how key assets are responding to Trump’s return:
- U.S. Dollar: The dollar surged by 1.8%, marking its largest single-day gain since February 2023. Investors are speculating that the Federal Reserve may pause its rate cuts, further boosting the currency.
- Bitcoin: The cryptocurrency soared almost 10%, reaching a new high of over $75,000, as investors see Trump’s pro-crypto stance as favorable for digital assets.
- S&P 500: Futures climbed 1.4%, signaling potential gains in U.S. equities, with market players hopeful for tax cuts and lighter regulations that could fuel further growth.
Potential Impacts on Nigeria and Oil-Exporting Nations
Trump’s return to office could place pressure on global oil prices as he is expected to advocate for increased U.S. oil and gas production. If domestic supply grows, it could weigh down oil prices in the long term. For Nigeria, a major oil producer, this scenario could be challenging, especially if a stronger dollar also puts downward pressure on crude prices. A combination of lower oil revenue and a stronger dollar might intensify economic strains for Nigeria, which heavily relies on oil exports for revenue.
Market Sectors Facing Downward Pressure
While some assets rally, others have seen declines in response to Trump’s win:
- Gold: Gold prices dropped by up to 1.5% as the dollar gained strength and Treasury yields increased, dimming the appeal of the metal as a safe haven.
- Chinese and European Stocks: Chinese indices fell on renewed concerns over U.S.-China trade tensions, while European markets saw red, weighed down by Trump’s proposed tariffs.
- Currencies of Key U.S. Trading Partners: The Euro, Chinese Yuan, and Mexican Peso have weakened against the dollar, anticipating potential trade policy shifts.
What Lies Ahead?
Trump’s presidency is expected to shape market sentiment in the coming years, especially for assets tied to the “Trump trade” such as the USD and Bitcoin. Investors may see heightened volatility as they did during his previous term. From 2017 to 2021, Trump’s unpredictable policies and trade conflicts with China triggered sharp spikes in the VIX, a volatility index. With Biden’s administration, volatility decreased, but Trump’s return could reintroduce turbulence across global markets.
Trump’s foreign policy is also likely to have far-reaching implications. He has vowed to “stop wars” and pledged to end the conflict in Ukraine. Any major policy shifts could increase geopolitical tensions, potentially sparking risk aversion among investors.
Federal Reserve Rate Decision on the Horizon
Following the election, market focus is now turning to the Federal Reserve’s upcoming rate decision on Thursday. Investors are anticipating a potential 25-basis-point rate cut in November, but Trump’s win may influence the Fed’s strategy going forward. A Trump-driven inflationary outlook could prompt the Fed to keep rates elevated, strengthening the dollar further while limiting gains for gold.
As the market adjusts to Trump’s victory, all eyes will be on the Fed’s next move. An unexpectedly hawkish stance could push the dollar higher while potentially capping gold prices. Conversely, any signals of further rate cuts could temper the dollar’s rise and support gold, adding another layer of intrigue to an already unpredictable market landscape.
